Gallus gallus domesticus (GD) is a natural mutant breed of chicken in Korea with an atypical characterization of melanin in its tissue. This study investigated the effects of melanin extracts of GD on osteoblast differentiation and inhibition of osteoclast formation. The effects of the melanin extract of GD on human osteoblast MG-63 cell differentiation were examined by evaluating cell viability, osteoblast differentiation, and expression of osteoblast-specific transcription factors such as bone morphogenetic protein 2 (BMP-2), small mothers against decapentaplegic homologs 5 (SMAD5), runt-related transcription factor 2 (RUNX2), osteocalcin and type 1 collagen (COL-1) by reverse transcription-polymerase chain reaction and western blotting analysis. We investigated the inhibitory effect of melanin on the osteoclasts formation through tartrate-resistant acid phosphatase (TRAP) activity and TRAP stains in Raw 264.7 cell. The melanin extract of GD was not cytotoxic to MG-63 cells at concentrations of 50-250 µg/mL. Alkaline phosphatase (ALP) activity and bone mineralization of melanin extract-treated cells increased in a dose-dependent manner from 50 to 250 µg/mL and were 149% and 129% at 250 µg/mL concentration, respectively (P < 0.05). The levels of BMP-2, osteocalcin, and COL-1 gene expression were significantly upregulated by 1.72-, 4.44-, and 2.12-fold in melanin-treated cells than in the control cells (P < 0.05). The levels of RUNX2 and SMAD5 proteins were higher in melanin-treated cells than in control vehicle-treated cells. The melanin extract attenuated the formation of receptor activator of nuclear factor kappa-B ligand-induced TRAP-positive multinucleated RAW 264.7 cells by 22%, and was 77% cytotoxic to RAW 264.7 macrophages at a concentration of 500 µg/mL. This study provides evidence that the melanin extract promoted osteoblast differentiation by activating BMP/SMADs/RUNX2 signaling and regulating transcription of osteogenic genes such as ALP, type I collagen, and osteocalcin. These results suggest that the effective osteoblastic differentiation induced by melanin extract from GD makes it potentially useful in maintaining bone health.